Investment firms disappoint SIIS

Monday, Nov. 25, 1996 | 11:59 a.m.

CARSON CITY -- Three companies that invest in the stock market with part of the $1 billion State Industrial Insurance System portfolio have been placed on probation for below-par performances.

The companies may be fired if they don't improve in the next three months.

"We're not losing money but they're not moving up as much as we think they should," said Douglas Dirks, general manager of SIIS, who noted the fast rise in the stock market this year.

The three investment firms placed on probation are Dodge & Cox, Independence Investment Associates and Fidelity Management Trust Co.

A report presented to the state Board of Finance showed the firms trailing average national performances by half a percent to 1 percent.

Of the $1.1 billion portfolio, about $351 million, or 31 percent, is in stocks. More than $614.3 million, or 55 percent, is in fixed-income investment such as government and corporate bonds.

SIIS is a quasi-government agency that collects premiums from about 44,000 private employers in Nevada to pay for medical and rehabilitation costs of workers injured on the job.

SIIS, which is recovering from near insolvency, says 21 percent of its annual income comes from its investments and is a major part of its drive to be in the black.

Last year, SIIS realized $76 million on its investments. A typical insurance company, Dirks said, relies on its investment income to pay for the operation and for the premiums collected to cover the benefits. He said SIIS is still $15 million away from getting enough from its investment to pay for its operations.

To further penalize the three firms, Dirks said they will not get any additional money to invest as SIIS collects more premiums in the next three months.